In fewer than two weeks, Santander will slash the rate on its Easy Access Saver. Is it time to shop around and move your cash to a better paying competitor?
The interest rate on Santander’s popular Easy Access Saver Limited Edition (Issue 3) account will fall from 5.2% AER (variable) to 4.2% AER (variable) on Monday 20 May.
The account is no longer open to new customers, but it was a best buy when it launched in September 2023. It was only on sale for just over a week before Santander stopped accepting new applications due to high demand. In March this year, it started informing customers about the upcoming rate cut.
The current 5.2% AER offered means Santander’s account is still unbeatable on rate if you’ve between £1 and £250,000 to save – though be mindful of the up-to-£85,000 Financial Services Compensation Scheme (FSCS) protection limit.
But once that rate drops to 4.2% AER – assuming the deals on offer in a fortnight remain around the rates available today – it means it can easily be beaten elsewhere.
According to Savings Champion data, the current best buy in the easy-access savings category is offered from Oxbury (5.02% AER), with the account available online. However, you need a hefty £20,000 sum, and if the balance falls below this threshold, you won’t receive any interest.
In second place is Monument’s easy-access offering, paying savers a slightly lower 5.01% AER. Again, you need to stump up significant savings of £25,000 to get this rate, though there’s no penalty for going below this threshold.
In third place is Paragon Bank, though this deal is slightly different, as to get the 5% AER, you need to go through savings platform Raisin. It has a much lower minimum opening balance requirement of £10,000 and there’s no limit to the number of withdrawals you can make.
However, the minimum withdrawal is £500 and you mustn’t take the account balance below £10,000 or the transaction won’t be authorised. Instead, you’ll need to close your account.
Short-term or longer-term savings?
If you have some time on your side and don’t need to access your cash right away, then you could consider notice accounts or fixed rate savings deals.
For instance, you can currently get 5.25% AER with Investec on its 90-Day Notice Saver. It can be opened online with a minimum £5,000. Alternatively, the 95 Day Notice Account offered by QIB via the Raisin savings platform pays 5.2% on a minimum £1,000. However, as this is a Sharia savings account, this is an expected profit rate. Further, the terms state that you can withdraw the full deposit amount only, which will be subject to a 95-day notice period.
Meanwhile, if you can store your cash away for longer, fixed rate bonds offer slightly higher rates, as you’re giving up access to your funds.
Here, the current top payer in the six-month category is 5.25% AER from both Atom Bank and Allica Bank. Atom requires just £50, while Allica has a £10,000 minimum opening balance.
There’s also one other point to make. This Thursday 9 May, the Bank of England’s Monetary Policy Committee (MPC) will publish its base rate decision.
This could impact the rates offered on cash savings accounts. And with a couple of weeks left until Santander’s rate cut takes effect, it’s a good idea to check out best buys after the base rate announcement, and around 20 May.
